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Friday, 23 March 1928


The PRESIDENT - The honorable gentleman knows that, to be in order, hi,s remarks must be confined to the subject matter of the bill. I ask him to comply with the Standing Orders.


Senator LYNCH - I am analysing the public utterances of a responsible Minister of the Crown in respect of matters that are touched by this financial agreement, and I am endeavouring to show that anything that may be said in future by that honorable gentleman must be viewed with the utmost suspicion. My purpose is to put the people on their guard, and to see that these things do not occur again. Of course the States will lose financially under this agreement. Nobody, excepting, perhaps, the Leader of the Senate, has pretended that the position will be otherwise. Certainly Western Australia will suffer. The time will come when that State will be second to none in the Commonwealth from the point of view of development. Why then should it be treated now with such cruelty and unkindness by the central Government - by men who ought to be kind to it because it has been kind to them? I shall never forget what that State has done for rae. It raised me from obscurity to a position in this Senate, and I should be wanting in all the qualities that go to make a man if J spoke of it in other than the kindliest terms. It has first claim to my best endeavours. I know only too well what is the lot of the people who are working under a semi-tropical sun in their endeavour to promote its development. My . purpose in this chamber is to see that they get a fair deal. I wish to safeguard the interests of future generations who will hold that State in trust for the rest of the Commonwealth. Their interests will not be trampled upon or ignored if I can help it, especially by those who ought to be their friends; by those whose stomachs were fed by the State, and whose naked limbs were covered by the goodwill of the people, who brought them from obscurity into prominent public positions. They should return benefaction for benefaction. I am here to do what I can to advance the interests of the people I represent, simply because I am part and parcel of the State that sent me here. I am grateful for what the people have done for me, and the last thing I want to do is to forget them.

I have already pointed out that under this- agreement, in 58 years' time the States will get nothing from the Federal" Government. I again remind the Government that the founders of federation and the earlier leaders of public thought in the federal sphere avowed that the in,terests of the .State would not be impaired.

Honorable senators should read the speeches that were delivered many years ago by Sir John Forrest, Sir George Turner, Sir William Lyne, and the Honorable C. C. "Kingston. The records of the past are studded with the most emphatic language affirming the principle that the States would never be deprived of their financial rights by the central administration if due respect was paid to the spirit of the Constitution. That undertaking had to be given to the States to bring them into line; otherwise there would never have been a federation. Such being the case, we should not now be false to our trust by ignoring the intention of the founders of federation. At the end of the 58th year the States will receive nothing except the trifling amount represented by the sinking-fund contribution on their indebtedness.' How much will that be? The proposal of the Government is based upon the assumption that £40,000,000 will be borrowed every year; and it is claimed that on that basis the contribution of 5s. per cent, by the central government will amount to £100,000 a year for the next 53 years. I have some startling figures which will prove to the Senate that that £40,000,000 is an imaginary figure, and is introduced merely for the purpose of magnifying the generosity of the Commonwealth towards the States. I have studied the borrowing of the early nineties, when the London money market was closed to Australia, and can show that the indebtedness of Australia in 1890-91 amounted to something like £47 per head of the population. The indebtedness of some of the States has more than doubled in the meantime, while that of others has increased sixfold. The public debt of the Commonwealth as a whole is now in the neighbourhood of £96 per head. Yet we have been told by a responsible Minister that borrowing is to be continued at the rate of £40,000,000 a year ! That fiction has been employed, as I have already said, to magnify the generosity of the Commonwealth towards the States! The sum of £100,000 annually will be required to amortize in the 53rd year the £40,000,000 borrowed in the first year. A further £40,000,000, it is said, may be borrowed in the second, third, and suc ceeding years. If that should be the amount borrowed every year for a period of 53 years, the sinking fund payment made by the Commonwealth on behalf of the States in the 58th year in full requital of the far capita payments will be a little over £5,000,000. Yet we have been told by the right honorable humbug who sits on the right of the Chair that the States will suffer no loss of wealth!

The PRESIDENT (Senator the Hon. Sir John Newlands). - Order! Did I understand the honorable senator to refer to another honorable senator as a humbug ?


Senator LYNCH - Well, he made a humbugging statement.


The PRESIDENT - Order f I have asked the honorable senator if he has referred to another honorable senator as a humbug. If he has done so I call upon him to withdraw the remark.


Senator LYNCH - I withdraw it. The effect of the statement to which I have referred is to humbug the people. In the 58th year of this agreement the population of the Commonwealth will probably be 20,000,000. Payment by the Commonwealth at the rate of 25s. per capita would involve a sum of something like £25,000,000. If we deduct the £5,000,000 odd, which the Commonwealth undertakes to pay it will be seen that the Commonwealth will be enriching itself at the expense of the States to the extent of no less than £20,000,000. It will thus be seen that there is no warrant for the claim that the States will not suffer any loss. Why should not the naked facts be told? Why is witness not borne to the truth? Is it because there is no truth in the honorable gentleman ? Is- not this a question in which not only the present population of 6,000,000, but also the probable future population of 20,000,000 must be interested? When I am told by a responsible Minister that there will be " no loss to the States" as the result of this bargaining my answer is that the loss will be of such colossal proportions that the States of that day, and the people who live in them and are dependent upon them, will be in a helpless and hapless condition. If they are still able to survive and make provision for the economic, social and domestic welfare of their people, it will not be because of any help they receive from the Federal Government, hut rather on account of a stroke of good fortune. If they find themselves in a helpless position, the cause will be this iniquitous agreement, that has been brought forward under false pretences.

Let me now deal with another equally audacious reason that has been advanced for accepting this agreement. We have been informed that the per. capita system is a means of enriching the rich and impoverishing the poor. I do not know what is the hypothesis upon which such an assertion is founded, but my retort is that those who have followed the development of this country are able to find arguments to prove the contrary. The States of New South Wales and Victoria will not be aggrandized and made richer. The experience of Canada and the United States of America proves that the rich are likely to be impoverished rather than enriched. The early settled States in Canada, such as Ontario, Quebec, New Brunswick, and Prince Edward Island, which are the equivalent of our older and richer States of the present day, have become comparatively poorer instead of richer. The population of Quebec has increased in the last twenty years by a shade over 2 per cent., and that of Ontario by slightly over 1 per cent. The movement of population has been to new lands like Saskatchewan, Manitoba, British Columbia and Alberta, where the increase has been from 6 per cent, to 36 per cent. In the case of Saskatchewan, the increase in population in 21 year? was from 91,279 to 757,510. Who will dare to say that such may not be the experience of. Western Australia- in the near future, and where then will be the justice and " generosity " of this proposal of the Government ? Therefore the Prime Minister worked on the credulity of the people when he said that the per capita payment would enrich the rich and impoverish the poor; the experience of Canada completely contradicts such an as.sertion. In the United States of America we find that the thirteen New England States which, at the beginning of the last century, stood high on the list, now contain only a fractional part of the population of that country.

It is quite true that, pro rata, a fair share of the wealth still remains in the older centres; but on a per capita basis the new areas in both Canada and the United States of America furnish proof that the vacant places in Australia are likely to derive the greatest benefit by way of increase in population and the creation of new wealth. If honorable senators will compare the relative progress of Queensland and New South Wales in the last 50 years they will find that that is a correct assumption to make. In Western Australia the experience has been similar to that of Canada and western America. In those countries the population migrated to places where there was elbow room, and founded vast cities like Chicago, which in the early part of last century was only a hamlet. As this country occupies a position similar to that which was occupied by America only 50 years 'ago, its experience will be identical. In the settlement of a new country the relative progress in the new regions is greater than that of the old, so that the per capita system will decidedly favour the older, while inflicting unmeasured hardship on the newer" and less developed areas.

We cannot prevent the party aspect from creeping into this discussion. We have in power to-day a party to which I give that support which is always the most valuable - the support of a candid friend who will tell a person of his faults as well as of his virtues. When I meet a man who will apprise me of my faults, I regard him. as one whose friendship I should cultivate; but it is wise to regard with suspicion the smooth-tongued gentleman who will flatter you and tell you only of your virtues, whether they be real or imaginary. I am a candid critic of this, as I have been of previous, governments. Of course, if I were more amenable to discipline, I should possibly fare better; but it is my nature to be as I am. In the past, I have been considered a .valuable man to send here and there to" places in which other persons were afraid to trust their skins. They lived in the security of salaried positions, while Lynch was sent out on dangerous escapades from which they stood to. benefit. So it is. in regard to the present Ministry. The astonishing thing is that the party in power is the party which all along lias claimed to have a deep-seated respect for the rights of the States. That party is now engaged in .stripping from the States the last shread of their financial security. [Extension of time granted,.'] Instead of assisting the States, this Parliament proposes to persecute them. If the giant spirits of the past- were on the Treasury bench, this bill would not be before us; there would not be this attack on the States. If honorable senators have ever stopped to consider what the States stand for they will realize that those things which make for the welfare of the people- are in the control and keeping of the States. There is scarcely an economic and social advantage enjoyed by the people of this country which is not directly traceable to State activity. Honorable senators, when they leave this chamber to-day, cannot Teach their homes without the assistance of at least one State, because the control of transportation is a State function, and has been since the States were formed. "We have but to think of our water supplies and systems of education and justice, to say nothing of the other manifold. activities of the States, to realize the important part they play in the welfare and daily lives of the people. Why is it then that this attempt to rob them of their financial resources is made? Honorable senators will agree that "money makes the mare go," yet they will vote for a bill to impoverish the States. I am sorry to see the party in power endorsing such an outrageous proposal. Had the latterday Labour party been in power, it would not have surprised me to see attempts made to bring about federalization and centralization of everything. Yet even that party, if returned to power, notwithstanding its desire to aggrandize the central authority and establish bureaucratic government, would probably recognize that the States have some rights. In other directions we have evidence that that party has altered its view-point. But supposing it came into power, and put into effect its policy by which the Senate would be abolished and the wings of the State governments clipped, what would happen? Let us consider the position of the dwellers outback in that event. Supposing that a main water pipe were to burst in an outback district of Western Australia through the neglect or incompetence of the local authority - a pipe on which a duty of 50 per cent, has . just been imposed - the settlers would be compelled to appeal to the central government first for assistance and then for an explanation. Before it was given their plight would indeed be serious. By robbing the States of their financial resources we shall cripple them. And what will be the gain ? The central,/ government could not discharge all the functions now discharged by the States ; it would be overloaded. I remind the Senate of the warning expressed by the late Mr. Alfred Deakin, that by overloading the central authority the heart of the nation would be so strained as to be utterly impotent to discharge its functions. I warn the Senate against bringing about the dawn of that period when in Australia we shall have a huge bureaucracy similar to that which has been bewailed by the President of the United States of America quite recently. Writing to the London Morning Post years ago the late Mr Alfred Deakin gave expression to some truths of which honorable senators should be reminded. I have not bore his exact words; but he pointed out that just as the power of the purse was the means whereby the House of Commons ascended to power, and became entrenched in the people's confidence, so would the same agency in Australia, particularly in the case of the central government, be the means of bringing to it one power after another until practically all authority within the Commonwealth would be vested in it. Mr. Deakin was a man of keen observation and prophetic instinct. He looked ahead and saw the time when we should be faced witu the conditions which now exist. He foresaw that the central government would continue to rob the States of their power and usefulness, and he realized that that would be a bad and a black day for the people in the outback districts. The measure before us is the first of many to rob the States of every penny excepting that paltry £5,000,000 to which I have already referred. In the interests of the people of Australia the Government should call a halt. The electors are fully engaged in the performance of their daily work, and in trying to pay their way, and have not the time to study these questions. They leave' to us the control of. public affairs. But they expect us to do our job properly. The correct thing for us to do is to adhere to the fundamental principles of the 'Constitution, and to allow the States to retain that financial independence which the framers of the Constitution guaranteed to them.


Senator Kingsmill - After all, the people are the judges.


Senator LYNCH - That is so, and it is well they will have a final say in this matter. Woe betide some of the members of this Parliament when next they appear before the electors! Suppose that that which so many desire comes to pass, and we find the central authority rolling in wealth, of what avail will it be? Will it advantage the average citizen if one government is rolling in wealth while the coffers of the others are empty or dependent on the' grace of the other? Is it not plain that the balance of utility will be badly upset to the disadvantage of civil and social progress and contentment? Do honorable senators believe that that would bc a desirable state of affairs? I ask them to reflect that tens- of thousands of people in this country are denied necessities because the State governments cannot provide them. Already the position is serious; but if this bill is agreed to, it will become worse. It is for that reason that I am making this protest. Probably my effort will be futile; but my voice will ring throughout the country as it has in the past to some good purpose. I oppose this measure because I know that the State governments ' have accepted it against their will, and perhaps . mortgaged . the rights of the next and future generations to meet the needs of the passing hour. We have the witness of Mr. Lang and Mr. Collier, and other members of the Premiers' Conference that they were coerced into accepting it. The agreement has been conceived, begotten, and brought forth in circumstances that augur ill for the country. In order to build . up a strong central authority, the State governments of the future are to be impoverished, and made weak, pale, anaemic imitations of the powers they ought to be. Again I say, what will it avail us if they become mere shadows of their glorious past? It is my intention, in committee, to move an amendment to provide that after the expiration of ten years from the passing of this bill, and thereafter every ten years, the population of each State shall be ascertained, and on the basis of 25s. per capita a calculation made showing the amount which would be payable to each State, which amount shall be - compared with the actual payments under this legislation, and that any deficiency, resulting from this legislation shall be made up to ' the States on the basis of their respective populations.


The PRESIDENT - Order ! The time fixed under the sessional orders for the adjournment of the Senate on Friday.' having arrived, I must put the motion -

That the Senate do now adjourn.

Motion agreed to.

Senate adjourned at 4.0 p.m.







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